U.S. lumber futures soared on Wednesday on expectations for demand to increase in the aftermath of monster storm Sandy that caused massive flooding in the northeastern United States, damaging numerous homes that would need rebuilding.
The storm, which made landfall on Monday evening and has killed at least 45 people, may cause up to $15 billion in insured losses, according to one disaster-modeling company.
"Historically, this is what happens after a natural disaster," said Michael Young, president of Pacific Futures Trading in Seattle, Washington.
Chicago Mercantile Exchange November, January and March lumber futures rose by the daily trading limit of $10 per thousand board feet and remained locked at those levels, effectively shutting down trading.
Benchmark January futures were $10 higher at $331.20 per tbf at 8:51 a.m. CDT (1351 GMT).
Traders said speculators were behind much of the buying in lumber futures as they anticipated demand to increase when people affected by Sandy begin to rebuild or repair their homes.
"There is anticipation of a big rush in demand after this storm," said a trader, who declined to be named.
The type of lumber traded at the CME is so-called framing lumber that is primarily used in home building.
The optimism over demand for lumber and other home-building materials was also reflected in Home Depot, the world's largest home improvement retailer, whose shares rose 3.2 percent to $61.98 by 9:00 a.m. CDT (1400 GMT).